It's always good to have data to back up a hunch: A recent IDC survey of 650 European companies taken between January and March of this year reported that 90 percent of companies that have adopted virtualization technologies did so to reduce data center costs.
So saving money is the key driver, not saving the environment or saving on real-estate or any of the soft benefits vendors like to tout.
Nor is it all that surprising that VMware sponsored the study. What will be interesting to watch is how much cost becomes a key driver should the global economy continue to sputter.
And if cost is a key driver, does it give Microsoft the advantage? If it's a forgone conclusion that companies will eventually migrate to Windows Server 2008, won't they also settle on the free Hyper-V?
Back in March, Gartner Analyst Thomas Bittman speculated precisely that, noting the following:
Although large enterprise customers may find its functionality to be lacking when compared with VMware (Microsoft won't support a live migration capability for several years), many midmarket customers will find Microsoft's solutions to be good enough especially if the goal is consolidation and centralized monitoring, not agility.
The virtualization vendors are scrambling to not leave the door wide open for this. VMware often takes the rap for being expensive, but it also offers a free product that it places in the same league as less-expensive offerings from competitors. The line is somewhat blurry, however, as these same vendors tend to pit their products against VMware's flagship ESX server or Virtual Infrastructure.
Despite VMware's huge slice of the current market, it's proving it isn't immune to pricing pressures. Last week, sandwiched between Hyper-V's wake and the holiday weekend in the United States, it brought VMware Server 2.0 one step closer to production. VMware Server, as you probably recall, is the rebranded and free GSX Server.
Key new features in VMware Server 2.0 RC 1, new features, including the capability to back up Windows virtual machines through inclusion of Microsoft's Volume Shadow Copy Service (VSS), which provides the backup infrastructure for Windows XP and Windows Server 2003. Also new is the Virtual Machine Communication Interface, which supports communications between VMs on the same host operating system, or between a VM and the host.
With this release it also touches down in the backup and storage arena, enabling users to connect with SCSI devices (e.g., tape backups to VMs).
Greene Out, Maritz In
VMware may in fact already be feeling Microsoft's bite. Early today, CEO Diane Greene announced she was stepping down, effective immediately. Former Microsoft executive Paul Maritz has been named her successor.
The company also announced 2008 revenue would be "modestly below" its previous forecast of 50 percent growth over 2007. Its second-quarter results are scheduled to be released on July 22.
Obviously, the markets did not react kindly to the news.
Clearly, virtualization technology is not as recession-proof as once thought. It seems too soon to speculate that VMware has peaked. One indicator will be how quickly Hyper-V gains traction. Windows Server 2008, certainly has not, though the general sentiment is that enterprises were waiting for Hyper-V. It's now here, and it's a lot less expensive than ESX, and not much more than VMware Server.
Amy Newman is the managing editor of ServerWatch. She has been covering virtualization since 2001.